<PAGE>
PaineWebber
Financial Services Growth Fund
PaineWebber
Utility Income Fund
---------------------------
PROSPECTUS
August 1, 1999
---------------------------
This prospectus offers shares in two of PaineWebber's stock funds. Each fund
offers four classes of shares--Classes A, B, C and Y. Each class has different
sales charges and ongoing expenses. You can choose the class that is best for
you based on how much you plan to invest and how long you plan to hold your
fund shares. Class Y shares are available only to certain types of investors.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved either fund's shares or determined whether this
prospectus is complete or accurate. To state otherwise is a crime.
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
Contents
The Funds
----------------------------------------------------------------
<TABLE>
<S> <C> <C>
What every investor 3 PaineWebber Financial Services Growth Fund
should know about
the funds 6 PaineWebber Utility Income Fund
9 More About Risks and Investment Strategies
Your Investment
------------------------------------------------------------------------------
Information for 11 Managing Your Fund Account
managing your fund --Flexible Pricing
account --Buying Shares
--Selling Shares
--Exchanging Shares
--Pricing and Valuation
Additional Information
------------------------------------------------------------------------------
Additional important 17 Management
information about
the funds 18 Dividends and Taxes
19 Financial Highlights
------------------------------------------------------------------------------
Where to learn more
about PaineWebber Back Cover
mutual funds
</TABLE>
The funds are not
complete or balanced
investment programs.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 2
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund
PaineWebber Financial Services Growth Fund
Investment Objective, Strategies and Risks
- --------------------------------------------------------------------------------
Fund Objective
Long-term capital appreciation.
Principal Investment Strategies
The fund invests primarily in stocks of financial services companies, such as
banks, thrifts, insurance companies, finance companies, securities firms and
companies that provide specialized services to them. The fund also invests, to
a lesser extent, in stocks of other types of companies and in bonds. Some of
the fund's stocks and bonds may be of foreign issuers and may be denominated in
foreign currencies. The fund may use options, futures contracts and other
derivatives as part of its investment strategy or to help manage portfolio
risks.
The fund's investment adviser, Mitchell Hutchins Asset Management Inc., seeks
to invest in stocks of companies with better-than-average earnings growth that
also represent strong, fundamental investment values. These include companies
that may benefit from changes in the financial services industry, such as
deregulation, consolidation and the growth of financial services other than
banking. Mitchell Hutchins especially looks for companies whose growth
characteristics and value are not yet recognized by the market. Mitchell
Hutchins also looks for companies in growing regions or with niche products or
technologies, whose earnings growth may be sustainable throughout the business
cycle.
In selecting specific investments for the fund, Mitchell Hutchins assesses a
company's current and anticipated revenues, earnings, cash flow, asset
composition and management practices.
Principal Risks
An investment in the fund is not guaranteed; you may lose money by investing in
the fund.
Common stocks, which are the fund's main type of investment, generally
fluctuate in value more than other investments. Since the fund's stocks are
concentrated in financial services companies, it will be more severely affected
by unfavorable developments in that industry than if it invested in a broad
range of businesses.
More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies." In particular,
see the following headings:
. Equity Risk
. Financial Services Industry Concentration Risk
. Interest Rate Risk
. Credit Risk
. Foreign Securities Risk
. Derivatives Risk
Information on the fund's investment strategies and recent holdings can be
found in its current annual/semi-annual reports (see back cover for information
on ordering those reports).
-----------
- --------------------------------------------------------------------------------
Prospectus Page 3
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund
Performance
- --------------------------------------------------------------------------------
Risk/Return Bar Chart and Table
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year.
The chart shows Class A shares because they have the longest performance
history of any class of fund shares. The chart does not reflect the effect of
sales charges; if it did, the total returns shown would be lower.
The table that follows the chart shows the average annual returns over several
time periods for each class of the fund's shares. That table does reflect fund
sales charges. The table compares fund returns to returns on a broad-based
market index that is unmanaged and that, therefore, does not include any sales
charges or expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
Total Return on Class A Shares
[CHART APPEARS HERE]
1989 21.71%
1990 -12.33%
1991 65.37%
1992 38.68%
1993 10.32%
1994 -0.75%
1995 47.46%
1996 28.96%
1997 45.20%
1998 2.31%
Calendar Year
<TABLE>
<S> <C>
===
</TABLE>
Total return January 1 to June 30, 1999--(0.42)%
Best quarter during years shown: 1st quarter, 1991--22.90%
Worst quarter during years shown: 3rd quarter, 1990--(18.78%)
Average Annual Total Returns
as of December 31, 1998
<TABLE>
<CAPTION>
Class Class A Class B* Class C Class Y S&P 500
(Inception Date) (5/22/86) (7/1/91) (7/2/92) (3/30/98) Index
- ---------------- --------- -------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
One Year......................... (2.28)% (3.44)% 0.55% N/A 28.60%
Five Years....................... 21.77% 21.79% 21.97% N/A 24.05%
Ten Years........................ 21.88% N/A N/A N/A 19.19%
Life of Class.................... 16.21% 24.17% 21.30% (3.59%)** ***
</TABLE>
- -------
* Assumes conversion of Class B shares to Class A after six years.
** Represents return for less than a full year.
*** Average annual total returns for the S&P 500 Index for the life of each
class were as follows: Class A--16.83%; Class B--20.19%; Class C--21.27%;
Class Y--12.87%.
----------
- --------------------------------------------------------------------------------
Prospectus Page 4
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund
Expenses and Fee Tables
- --------------------------------------------------------------------------------
Fees and Expenses These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
Shareholder Transaction Expenses (fees paid directly from your investment)
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- --------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases
(as a % of offering price)................. 4.5% None None None
Maximum Contingent Deferred Sales Charge
(Load) (CDSC)
(as a % of offering price)................. None 5% 1% None
Exchange Fee................................ None None None None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- --------
<S> <C> <C> <C> <C>
Management Fees............................. 0.70% 0.70% 0.70% 0.70%
Distribution and/or Service (12b-1) Fees.... 0.25 1.00 1.00 0.00
Other Expenses.............................. 0.22 0.24 0.24 0.20
---- ---- ------ ------
Total Annual Fund Operating Expenses........ 1.17% 1.94% 1.94% 0.90%
Example
This example is intended to help you compare the cost of investing in the fund
with the cost of investing other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:
<CAPTION>
1 year 3 years 5 years 10 years
------- ------- ------- --------
<S> <C> <C> <C> <C>
Class A..................................... $564 $805 $1,065 $1,806
Class B (assuming sale of all shares at end
of period)................................. 697 909 1,247 1,881
Class B (assuming no sale of shares)........ 197 609 1,047 1,881
Class C (assuming sale of all shares at end
of period)................................. 297 609 1,047 2,264
Class C (assuming no sale of shares)........ 197 609 1,047 2,264
Class Y..................................... 92 287 498 1,108
</TABLE>
----------
- --------------------------------------------------------------------------------
Prospectus Page 5
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Utility Income Fund
PaineWebber Utility Income Fund
Investment Objective, Strategies and Risks
- --------------------------------------------------------------------------------
Fund Objective
Current income and capital appreciation.
Principal Investment Strategies
The fund invests primarily in income-producing stocks and bonds issued by U.S.
and foreign utility companies. These are companies that own or operate
facilities for telecommunications or for generating, transmitting or
distributing electricity, gas or water. The fund also invests, to a lesser
extent, in companies outside the utility industries and in money market
instruments. The fund may use options, futures and other derivatives as part of
its investment strategy or to help manage portfolio risks.
The fund's investment adviser, Mitchell Hutchins Asset Management Inc., seeks
to find companies that should benefit from a changing operating environment.
Long-term changes include a trend toward deregulation in all utility
industries, an increasing ability of telephone companies to enter new
businesses and consolidation among electric utilities. Mitchell Hutchins
allocates the fund's investments between stocks and bonds based on its judgment
of what will achieve the best balance of income and growth under prevailing
economic conditions. Mitchell Hutchins evaluates individual issuers based on
the issuer's business and regulatory environment, its ability to maintain low
production costs and other measures of fundamental value.
Principal Risks
An investment in the fund is not guaranteed; you may lose money by investing in
the fund.
Common stocks generally fluctuate in value more than other investments. Utility
company stocks, like bonds, generally fall in price when interest rates rise.
Since the fund's investments are concentrated in utility companies, it will be
more severely affected by unfavorable developments in the utility industries
than if it invested in a broad range of businesses.
More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies." In particular,
see the following headings:
.Equity Risk
.Utility Industries Concentration Risk
.Interest Rate Risk
.Credit Risk
.Foreign Securities Risk
.Derivatives Risk
Information on the fund's investment strategies and recent holdings can be
found in its current annual/semi-annual reports (see back cover for information
on ordering those reports).
-----------
- --------------------------------------------------------------------------------
Prospectus Page 6
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Utility Income Fund
Performance
- --------------------------------------------------------------------------------
Risk/Return Bar Chart and Table
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year.
The chart shows Class A shares because they have as long a performance history
as any class of fund shares. The chart does not reflect the effect of sales
charges; if it did, the total returns shown would be lower.
The table that follows the chart shows the average annual returns over several
time periods for each class of the fund's shares. That table does reflect fund
sales charges. The table compares fund returns to returns on a broad-based
market index and to a more narrowly based index that reflects the utility
industries market sector. Both of these indices are unmanaged and, therefore,
do not include any sales charges or expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
Total Return on Class A Shares
[CHART APPEARS HERE]
1989 0%
1990 0%
1991 0%
1992 0%
1993 0%
1994 -9.71%
1995 28.82%
1996 7.90%
1997 25.75%
1998 12.87%
Calendar Year
Total return January 1 to June 30, 1999--2.53%
Best quarter during years shown: 4th quarter, 1997--10.55%
Worst quarter during years shown: 1st quarter, 1994--(7.33)%
Average Annual Total Returns
as of December 31, 1998
<TABLE>
<CAPTION>
S&P S&P
Class Class A Class B Class C Class Y 500 Utility
(Inception Date) (7/2/93) (7/2/93) (7/2/93) (9/10/98) Index Index
- ---------------- -------- -------- -------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
One Year.................... 7.77% 7.03% 11.00% N/A 28.60% 14.77%
Five Years.................. 11.20% 11.13% 11.37% N/A 24.05% 13.90%
Life of Class............... 9.99% 9.97% 10.07% 14.11%* ** ***
</TABLE>
- -------
*Represents return for less than a full year.
**Average annual total returns for the S&P 500 Index for the life of each
class were as follows: Class A--22.72%; Class B--22.72%; Class C--22.72%;
Class Y--29.05%.
***Average annual total returns for the S&P Utility Index for the life of each
class were as follows: Class A--12.74%; Class B--12.74%; Class C--12.74%;
Class Y--11.17%.
-----------
- --------------------------------------------------------------------------------
Prospectus Page 7
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Utility Income Fund
Expenses and Fee Tables
- --------------------------------------------------------------------------------
Fees and Expenses These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
Shareholder Transaction Expenses (fees paid directly from your investment)
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases
(as a % of offering price).................... 4.5% None None None
Maximum Contingent Deferred Sales Charge (Load)
(CDSC)
(as a % of offering price).................... None 5% 1% None
Exchange Fee................................... None None None None
</TABLE>
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees................................ 0.70% 0.70% 0.70% 0.70%
Distribution and/or Service (12b-1) Fees....... 0.25 1.00 1.00 0.00
Other Expenses................................. 0.64 0.65 0.65 0.55
---- ---- ---- ----
Total Annual Fund Operating Expenses........... 1.59% 2.35% 2.35% 1.25%
</TABLE>
Example
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A....................................... $604 $ 929 $1,277 $2,254
Class B (assuming sale of all shares at end of
period)...................................... 738 1,033 1,455 2,323
Class B (assuming no sale of shares).......... 238 733 1,255 2,323
Class C (assuming sale of all shares at end of
period)...................................... 338 733 1,255 2,686
Class C (assuming no sale of shares).......... 238 733 1,255 2,686
Class Y....................................... 127 397 686 1,511
</TABLE>
-----------
- --------------------------------------------------------------------------------
Prospectus Page 8
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
More About Risks and Investment Strategies
- -------------------------------------------------------------------------------
Principal Risks
The main risks of investing in one or both of the funds are described below.
Not all of these risks apply to each fund. You can find a list of the main
risks that apply to a particular fund by looking under the "Investment
Objective, Strategies and Risks" heading for that fund.
Other risks of investing in a fund, along with further detail about some of
the risks described below, are discussed in the funds' Statement of Additional
Information ("SAI"). Information on how you can obtain the SAI is on the back
cover of this prospectus.
Credit Risk. Credit risk is the risk that the issuer of a bond will not make
principal or interest payments when they are due. Even if an issuer does not
default on a payment, a bond's value may decline if the market believes that
the issuer has become less able, or less willing, to make payments on time.
Even high quality bonds are subject to some credit risk. However, credit risk
is higher for lower quality bonds. Bonds that are not investment grade involve
high credit risk and are considered speculative. Lower quality bonds may
fluctuate in value more than higher quality bonds and, during periods of
market volatility, may be more difficult to sell at the time and price a fund
desires.
Derivatives Risk. The value of "derivatives"--so-called because their value
"derives" from the value of an underlying asset, reference rate or index--may
rise or fall more rapidly than other investments. For some derivatives, it is
possible for a fund to lose more than the amount it invested in the
derivative. Options, futures contracts and forward currency contracts are
examples of derivatives. If a fund uses derivatives to adjust or "hedge" the
overall risk of its portfolio, it is possible that the hedge will not succeed.
This may happen for various reasons, including unexpected changes in the value
of the derivatives that are not matched by opposite changes in the value of
the rest of the fund's portfolio.
Equity Risk. The prices of common stocks and other equity securities generally
fluctuate more than those of other investments. They reflect changes in the
issuing company's financial condition and changes in the overall market. A
fund may lose a substantial part, or even all, of its investment in a
company's stock.
Financial Services Industry Concentration Risk. Financial Services Growth Fund
concentrates its investments in financial services companies. Therefore, it
will be more affected by economic, competitive and regulatory developments in
the financial services industry than it would be if it invested in a broad
range of businesses.
Financial services companies may be subject to severe price competition, and
they also are subject to extensive governmental regulation. Regulation limits
their business activities and also may limit the interest rates and fees they
can charge. Proposed federal legislation would reduce the separation between
the commercial and investment banking businesses. Both the industry and the
fund may be significantly affected if that legislation is enacted.
The profitability of financial services companies is largely dependent on the
availability and cost of capital funds. It can fluctuate significantly when
interest rates change. Credit losses resulting from financial difficulties of
customers also can negatively affect the industry.
Foreign Securities Risk. Foreign securities involve risks that normally are
not associated with securities of U.S. issuers. These include risks relating
to political, social and economic developments abroad and differences between
U.S. and foreign regulatory requirements and market practices. When securities
are denominated in foreign currencies, they also are subject to the risk that
the value of the foreign currency will fall in relation to the U.S. dollar.
Interest Rate Risk. The value of bonds can be expected to fall when interest
rates rise and to rise when interest rates fall. Interest rate risk is the
risk that interest rates will rise, so that the value of a fund's investments
in bonds will fall. Because interest rate risk
-----------
- -------------------------------------------------------------------------------
Prospectus Page 9
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
is the primary risk presented by U.S. government and other very high quality
bonds, changes in interest rates may actually have a larger effect on the
value of those bonds than on lower quality bonds.
Utility Industries Concentration Risk. Utility Income Fund concentrates its
investments in the utility industries. Therefore, it will be more affected by
economic, competitive and regulatory developments in those industries than it
would be if it invested in a broad range of businesses.
Interest rate changes may affect the value of the fund's assets. When interest
rates decline, prices of utility stocks and bonds tend to increase. When
interest rates rise, these prices tend to decrease.
The same trend toward deregulation that presents opportunities in the utility
industries also presents special risks. Some companies may be faced with
increased competition and may become less profitable.
Electric utility companies are subject to increases in fuel and other
operating costs, increases in interest costs, compliance costs relating to
environmental, nuclear facility and other safety regulations. Other types of
utilities face similar problems.
Additional Risks
Year 2000 Risk. The funds could be adversely affected by problems relating to
the inability of computer systems used by Mitchell Hutchins and the funds'
other service providers to recognize the year 2000. While year 2000-related
computer problems could have a negative effect on the funds, Mitchell Hutchins
is working to avoid these problems with respect to its own computer systems
and to obtain assurances from service providers that they are taking similar
steps.
Similarly, the companies in which the funds invest and trading systems used by
the funds could be adversely affected by this issue. The ability of a company
or trading system to respond successfully to the issue requires both
technological sophistication and diligence, and there can be no assurance that
any steps taken will be sufficient to avoid an adverse impact on the funds.
This risk may be greater with respect to trading systems in foreign countries.
Additional Investment Strategies
Defensive Positions; Cash Reserves. In order to protect itself from adverse
market conditions, a fund may take a temporary defensive position that is
different from its normal investment strategy. This means that the fund may
temporarily invest a larger-than-normal part, or even all, of its assets in
cash or money market instruments. Since these investments provide relatively
low income, a defensive position may not be consistent with achieving a fund's
investment objective. Each fund may invest up to 35% of its total assets in
cash or money market instruments as a cash reserve for liquidity or, in the
case of Utility Income Fund, as part of its ordinary investment strategy.
Portfolio Turnover. Each fund may engage in frequent trading (high portfolio
turnover) in order to achieve its investment objective.
Frequent trading may increase the portion of a fund's capital gains that are
realized for tax purposes in any given year. This may increase the fund's
taxable dividends in that year. Frequent trading also may increase the portion
of a fund's realized capital gains that are considered "short-term" for tax
purposes. Shareholders will pay higher taxes on dividends that represent
short-term gains than they would pay on dividends that represent long-term
gains. Frequent trading also may result in higher fund expenses due to
transaction costs.
The funds do not restrict the frequency of trading in order to limit expenses
or the tax effect that the fund's dividends may have on shareholders.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 10
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
Managing Your Fund Account
- -------------------------------------------------------------------------------
Flexible Pricing
The funds offer four classes of shares--Class A, Class B, Class C and Class Y.
Each class has different sales charges and ongoing expenses. You can choose
the class that is best for you, based on how much you plan to invest in and
how long you plan to hold your fund shares. Class Y shares are only available
to certain types of investors.
Each fund has adopted a plan under rule 12b-1 for its Class A, Class B and
Class C shares that allows it to pay service and (for Class B and Class C
shares) distribution fees for the sale of its shares and services provided to
shareholders. Because the 12b-1 distribution fees for Class B and Class C
shares are paid out of a fund's assets on an ongoing basis, over
time they will increase the cost of your investment and may cost you more than
if you paid a front-end sales charge.
Class A Shares
Class A shares have a front-end sales charge that is included in the offering
price of the Class A shares. This sales charge is not invested in the fund.
Class A shares pay an annual 12b-1 service fee of 0.25% of average net assets,
but they pay no 12b-1 distribution fees. The ongoing expenses for Class A
shares are lower than for Class B and Class C shares.
The Class A sales charges for each fund are described in the following table.
Class A Sales Charges
<TABLE>
<CAPTION>
Sales Charge as a Percentage of: Discount to Selected Dealers as
Amount of Investment Offering Price Net Amount Invested Percentage of Offering Price
- -------------------- -------------- ------------------- -------------------------------
<S> <C> <C> <C>
Less than $50,000....... 4.50% 4.71% 4.25%
$50,000 to $99,999...... 4.00 4.17 3.75
$100,000 to $249,999.... 3.50 3.63 3.25
$250,000 to $499,999.... 2.50 2.56 2.25
$500,000 to $999,999.... 1.75 1.78 1.50
$1,000,000 and over(1).. None None 1.00(2)
</TABLE>
- -------
(1) A contingent deferred sales charge of 1% of the shares' offering price or
the net asset value at the time of sale by the shareholder, whichever is
less, is charged on sales of shares made within one year of the purchase
date. Class A shares representing reinvestment of dividends are not
subject to this 1% charge. Withdrawals in the first year after purchase of
up to 12% of the value of the fund account under the funds' Systematic
Withdrawal Plan are not subject to this charge.
(2) Mitchell Hutchins pays 1% to PaineWebber.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 11
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
Sales Charge Reductions and Waivers. You may qualify for a lower sales charge
if you already own Class A shares of a PaineWebber mutual fund. You can
combine the value of Class A shares that you own in other PaineWebber funds
and the purchase amount of the Class A shares of the PaineWebber fund that you
are buying.
You may also qualify for a lower sales charge if you combine your purchases
with those of:
. your spouse, parents or children under age 21;
. your Individual Retirement Accounts (IRAs);
. certain employee benefit plans, including 401(k) plans;
. a company that you control;
. a trust that you created;
. Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts created
by you or by a group of investors for your children; or
. accounts with the same adviser.
You may qualify for a complete waiver of the sales charge if you:
. Are an employee of PaineWebber or its affiliates or the spouse, parent or
child under age 21 of a PaineWebber employee;
. Buy these shares through a PaineWebber Financial Advisor who was formerly
employed as an investment executive with a competing brokerage firm that was
registered as a broker-dealer with the SEC, and
--you were the Financial Advisor's client at the competing brokerage firm;
--within 90 days of buying shares in a fund, you sell shares of one or more
mutual funds that were principally underwritten by the competing brokerage
firm or its affiliates, and you either paid a sales charge to buy those
shares, pay a contingent deferred sales charge when selling them or held
those shares until the contingent deferred sales charge was waived; and
--you purchase an amount that does not exceed the total amount of money you
received from the sale of the other mutual fund;
. Acquire these shares through the reinvestment of dividends of a PaineWebber
unit investment trust;
. Are a 401(k) or 403(b) qualified employee benefit plan with 50 or more
eligible employees in the plan or at least $1 million in assets; or
. Are a participant in the PaineWebber Members Only sm Program. For
investments made pursuant to this waiver, Mitchell Hutchins may make
payments out of its own resources to PaineWebber and to participating
membership organizations in a total amount not to exceed 1% of the amount
invested.
Note: See the funds' SAI, for some other sales charge waivers. If you think
you qualify for any sales charge reductions or waivers, you will need to
provide documentation to PaineWebber or the fund. For more information, you
should contact your PaineWebber Financial Advisor or correspondent firm or
call 1-800-647-1568. If you want information on the funds' Systematic
Withdrawal Plan, see the SAI or contact your PaineWebber Financial Advisor or
correspondent firm.
Class B Shares
Class B shares have a contingent deferred sales charge. When you purchase
Class B shares, we invest 100% of your purchase price in fund shares. However,
you may have to pay the deferred sales charge when you sell your fund shares,
depending on how long you own the shares.
Class B shares pay an annual 12b-1 distribution fee of 0.75% of average net
assets, as well as an annual 12b-1 service fee of 0.25% of average net assets.
If you hold your Class B shares for six years, they will automatically convert
to Class A shares, which have lower ongoing expenses.
If you sell Class B shares before the end of six years, you will pay a
deferred sales charge. We calculate the deferred sales charge by multiplying
the lesser of the net asset value of the Class B shares at the time of
purchase or the net asset value at the time of sale by the percentage shown
below:
-----------
- -------------------------------------------------------------------------------
Prospectus Page 12
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
<TABLE>
<CAPTION>
Percentage by which the
If you sell shares' net asset
shares within: value is multiplied:
- -------------- -----------------------
<S> <C>
1st year since purchase................................. 5%
2nd year since purchase................................. 4
3rd year since purchase................................. 3
4th year since purchase................................. 2
5th year since purchase................................. 2
6th year since purchase................................. 1
7th year since purchase................................. None
</TABLE>
We will not impose the deferred sales charge on Class B shares representing
reinvestment of dividends or on withdrawals in any year of up to 12% of the
value of your Class B shares under the Systematic Withdrawal Plan.
To minimize your deferred sales charge, we will assume that you are selling:
. First, Class B shares representing reinvested dividends, and
. Second, Class B shares that you have owned the longest.
Sales Charge Waivers. You may qualify for a waiver of the deferred sales
charge on a sale of shares if:
. You participate in the Systematic Withdrawal Plan;
. You are older than 59 1/2 and are selling shares to take a distribution from
certain types of retirement plans;
. You receive a tax-free return of an excess IRA contribution;
. You receive a tax-qualified retirement plan distribution following
retirement; or
. The shares are sold within one year of your death and you owned the shares
either (1) as the sole shareholder or (2) with your spouse as a joint tenant
with the right of survivorship.
Note: If you think you qualify for any of these sales charge waivers, you will
need to provide documentation to PaineWebber or the fund. For more
information, you should contact your PaineWebber Financial Advisor or
correspondent firm or call 1-800-647-1568. If you want information on the
Systematic Withdrawal Plan, see the SAI or contact your PaineWebber Financial
Advisor or correspondent firm.
Class C Shares
Class C shares have a level load sales charge in the form of ongoing 12b-1
distribution fees. When you purchase Class C shares, we invest 100% of your
purchase price in fund shares.
Class C shares pay an annual 12b-1 distribution fee of 0.75% of average net
assets, as well as an annual 12b-1 service fee of 0.25% of average net assets.
Class C shares do not convert to another class of shares. This means that you
will pay the 12b-1 fees for as long as you own your shares.
Class C shares also have a contingent deferred sales charge. You may have to
pay the deferred sales charge if you sell your shares within one year of the
date you purchased them. We calculate the deferred sales charge on sales of
Class C shares by multiplying 1.00% by the lesser of the net asset value of
the Class C shares at the time of purchase or the net asset value at the time
of sale. We will not impose the deferred sales charge on Class C shares
representing reinvestment of dividends or on withdrawals in the first year
after purchase, of up to 12% of the value of your Class C shares under the
Systematic Withdrawal Plan.
Note: If you want information on the funds' Systematic Withdrawal Plan, see
the SAI or contact your PaineWebber Financial Advisor or correspondent firm.
Class Y Shares
Class Y shares have no sales charge. Only specific types of investors can
purchase Class Y shares. You may be eligible to purchase Class Y shares if
you:
. Buy shares through PaineWebber's PACE Multi-Advisor Program;
. Buy $10 million or more of PaineWebber fund shares at any one time;
. Are a qualified retirement plan with 5,000 or more eligible employees or $50
million in assets; or
. Are an investment company advised by PaineWebber or an affiliate of
PaineWebber.
The trustee of PaineWebber's 401(k) Plus Plan for its employees is also
eligible to purchase Class Y shares.
Class Y shares do not pay ongoing distribution or service fees or sales
charges. The ongoing expenses for Class Y shares are the lowest for all the
classes.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 13
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
Buying Shares
If you are a PaineWebber client, or a client of a PaineWebber correspondent
firm, you can purchase fund shares through your Financial Advisor. Otherwise,
you can invest in the funds through the funds' transfer agent, PFPC Inc. You
can obtain an application by calling 1-800-647-1568. You must complete and
sign the application and mail it, along with a check, to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you wish to invest in other PaineWebber Funds, you can do so by:
. Contacting your Financial Advisor (if you have an account at PaineWebber or
at a PaineWebber correspondent firm);
. Mailing an application with a check; or
. Opening an account by exchanging shares from another PaineWebber fund.
You do not have to complete an application when you make additional
investments in the same fund.
The funds and Mitchell Hutchins reserve the right to reject a purchase order
or suspend the offering of shares.
Minimum Investments
<TABLE>
<S> <C>
To open an account...................................................... $1,000
To add to an account.................................................... $ 100
</TABLE>
Each fund may waive or reduce these amounts for:
. Employees of PaineWebber or its affiliates; or
. Participants in certain pension plans, retirement accounts, unaffiliated
investment programs or the funds' automatic investment plans.
Frequent Trading. The interests of a fund's long-term shareholders and its
ability to manage its investments may be adversely affected when its shares
are repeatedly bought and sold in response to short-term market fluctuations--
also known as "market timing." When large dollar amounts are involved, the
fund may have difficulty implementing long-term investment strategies, because
it cannot predict how much cash it will have to invest. Market timing also may
force the fund to sell portfolio securities at disadvantageous times to raise
the cash needed to buy a market timer's fund shares. These factors may hurt
the fund's performance and its shareholders. When Mitchell Hutchins believes
frequent trading would have a disruptive effect on a fund's ability to manage
its investments, Mitchell Hutchins and the fund may reject purchase orders and
exchanges into the fund by any person, group or account that Mitchell Hutchins
believes to be a market timer. A fund may notify the market timer that a
purchase order or an exchange has been rejected after the day the order is
placed.
Selling Shares
You can sell your fund shares at any time. If you own more than one class of
shares, you should specify which class you want to sell. If you do not, the
fund will assume that you want to sell shares in the following order: Class A,
then Class C, then Class B and last, Class Y.
If you want to sell shares that you purchased recently, the fund may delay
payment until it verifies that it has received good payment. If you purchased
shares by check, this can take up to 15 days.
If you have an account with PaineWebber or a PaineWebber correspondent firm,
you can sell shares by contacting your Financial Advisor.
If you do not have an account at PaineWebber or a correspondent firm, and you
bought your shares through the transfer agent, you can sell your shares by
writing to the fund's transfer agent. Your letter must include:
. Your name and address;
. The fund's name;
. The fund account number;
. The dollar amount or number of shares you want to sell; and
. A guarantee of each registered owner's signature. A signature guarantee may
be obtained from a financial institution, broker, dealer or clearing agency
that is a participant in one of the medallion programs recognized by the
Securities Transfer Agents Association. These are: Securities Transfer
Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP)
and the New York Stock Exchange Medallion Signature
-----------
- -------------------------------------------------------------------------------
Prospectus Page 14
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
Program (MSP). The funds will not accept signature guarantees that are not a
part of these programs.
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you sell Class A shares and then repurchase Class A shares of the same fund
within 365 days of the sale, you can reinstate your account without paying a
sales charge.
It costs each fund money to maintain shareholder accounts. Therefore, the
funds reserve the right to repurchase all shares in any account that has a net
asset value of less than $500. If a fund elects to do this with your account,
it will notify you that you can increase the amount invested to $500 or more
within 60 days. A fund will not repurchase shares in accounts that fall below
$500 solely because of a decrease in the fund's net asset value.
Exchanging Shares
You may exchange Class A, Class B or Class C shares of each fund for shares of
the same class of most other PaineWebber funds. You may not exchange Class Y
shares.
You will not pay either a front-end sales charge or a deferred sales charge
when you exchange shares. However, you may have to pay a deferred sales charge
if you later sell the shares you acquired in the exchange. Each fund will use
the date that you purchased the shares in the first fund to determine whether
you must pay a deferred sales charge when you sell the shares in the acquired
fund.
Other PaineWebber funds may have different minimum investment amounts. You may
not be able to exchange your shares if your exchange is not as large as the
minimum investment amount in that other fund.
You may exchange shares of one fund for shares of another fund only after the
first purchase has settled and the first fund has received your payment.
PaineWebber Clients. If you bought your shares through PaineWebber or a
correspondent firm, you may exchange your shares by placing an order with your
PaineWebber Financial Advisor.
Other Investors. If you are not a PaineWebber client, you may exchange your
shares by writing to the fund's transfer agent. You must include:
. Your name and address;
. The name of the fund whose shares you are selling and the name of the fund
whose shares you want to buy;
. Your account number;
. How much you are exchanging (by dollar amount or by number of shares to be
sold); and
. A guarantee of your signature. (See "Buying Shares" for information on
obtaining a signature guarantee.)
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
A fund may modify or terminate the exchange privilege at any time.
Pricing and Valuation
The price at which you may buy, sell or exchange fund shares is based on net
asset value per share. Each fund calculates net asset value on days that the
New York Stock Exchange is open. Each fund calculates net asset value
separately for each class as of the close of regular trading on the NYSE
(generally, 4:00 p.m., Eastern time). The NYSE normally is not open, and the
funds do not price their shares, on national holidays and on Good Friday. If
trading on the NYSE is halted for the day before 4:00 p.m., Eastern time, the
fund's net asset value per share will be calculated as of the time trading was
halted.
Your price for buying, selling or exchanging shares will be based on the net
asset value that is next calculated after the fund accepts your order. If you
place your order through PaineWebber, your PaineWebber Financial Advisor is
responsible for making sure that your order is promptly sent to the fund.
You should keep in mind that a front-end sales charge may be applied to your
purchase if you buy Class A shares. A deferred sales charge may be applied
when you sell Class B or Class C shares.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 15
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
Each fund calculates its net asset value based on the current market value for
its portfolio securities. The funds normally obtain market values for their
securities from independent pricing services that use reported last sales
prices, current market quotations or valuations from computerized "matrix"
systems that derive values based on comparable securities. If a market value
is not available from an independent pricing source for a particular security,
that security is valued at a fair value determined by or under the direction
of the fund's board. The funds normally use the amortized cost method to value
bonds that will mature in 60 days or less.
Judgment plays a greater role in valuing thinly traded securities, including
many lower-rated bonds, because there is less reliable, objective data
available.
The funds calculate the U.S. dollar value of investments that are denominated
in foreign currencies daily, based on current exchange rates. A fund may own
securities, including some securities that trade primarily in foreign markets,
that trade on weekends or other days on which a fund does not calculate net
asset value. You will not be able to sell your shares on those days. If a fund
concludes that a material change in the value of a foreign security has
occurred after the close of trading in its principal foreign market but before
the close of regular trading on the NYSE, the fund may use fair value methods
to reflect those changes. Any use of fair value methods would be intended to
assure that the fund's net asset value fairly reflects security values as of
the time of pricing.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 16
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
Management
- -------------------------------------------------------------------------------
Investment Adviser
Mitchell Hutchins Asset Management Inc. is the investment adviser and
administrator of the funds. Mitchell Hutchins is located at 1285 Avenue of the
Americas, New York, New York, 10019, and is a wholly owned asset management
subsidiary of PaineWebber Incorporated, which is wholly owned by Paine Webber
Group Inc., a publicly owned financial services holding company. On June 30,
1999, Mitchell Hutchins was adviser or sub-adviser of 33 investment companies
with 75 separate portfolios and aggregate assets of approximately $47.2
billion.
Portfolio Managers
Financial Services Growth Fund. Mark Tincher and Andrew B. Dinnhaupt are
responsible for the day-to-day management of the fund's portfolio. Mr. Tincher
is a managing director and chief investment officer of equities of Mitchell
Hutchins, responsible for overseeing the management of equity investments. He
assumed his responsibilities for the fund in May 1999. Prior to joining
Mitchell Hutchins in April 1995, Mr. Tincher was a vice president at Chase
Manhattan Private Bank, where he directed the U.S. funds management and equity
research area and oversaw the management of all Chase U.S. equity funds. Mr.
Dinnhaupt is a first vice president of Mitchell Hutchins and a financial
services analyst, and has been a portfolio manager for the fund since October
1998. Prior to joining Mitchell Hutchins in July 1996, Mr. Dinnhaupt worked at
Summit Bank as an investment officer, portfolio manager, credit analyst and
financial services analyst.
Utility Income Fund. Mark Tincher and Christopher T. Solmssen are responsible
for the day-to-day management of the fund's stock portfolio. Mr. Tincher also
is responsible for determining the allocation of fund assets between stocks
and bonds. James F. Keegan and Julieanna Berry are responsible for the day-to-
day management of the fund's bond portfolio.
Mr. Tincher and Mr. Solmssen assumed their responsibilities for the fund in
May 1999. Further information about Mr. Tincher's background may be found
above under "Financial Services Growth Fund." Mr. Solmssen is a vice president
of Mitchell Hutchins and an equity analyst covering utilities,
telecommunications and energy. Prior to joining Mitchell Hutchins in January
1998, Mr. Solmssen worked at Sun America Asset Management as an equity
analyst. Mrs. Berry and Mr. Keegan have held their fund responsibilities since
March and April 1996, respectively. Mrs. Berry is a first vice president of
Mitchell Hutchins, where she has been employed as a portfolio manager since
1989. Mr. Keegan is a senior vice president of Mitchell Hutchins and oversees
all corporate bond investments. Prior to joining Mitchell Hutchins in 1995,
Mr. Keegan was the director of fixed income strategy and research at the
Merrion Group, L.P.
Advisory Fees
The funds paid advisory fees to Mitchell Hutchins for the most recent fiscal
year at the following rate of average daily net assets:
<TABLE>
<S> <C>
Financial Services Growth Fund............................................ 0.70%
Utility Income Fund....................................................... 0.70%
</TABLE>
Other Information
The funds have received an exemptive order from the SEC that permits their
boards to appoint and replace sub-advisers and to amend sub-advisory contracts
without obtaining shareholder approval. A fund's shareholders must approve
this policy before its board may implement it. As of the date of this
prospectus, the funds have not asked their shareholders to do so.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 17
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
Dividends and Taxes
- -------------------------------------------------------------------------------
Dividends
Financial Services Growth Fund normally declares and pays dividends and
distributes any gains annually. Utility Income Fund normally pays quarterly
dividends and distributes any gains annually.
Classes with higher expenses are expected to have lower dividends. For
example, Class B shares and Class C are expected to have the lowest dividends
of any class of a fund's shares, while Class Y shares are expected to have the
highest.
You will receive dividends in additional shares of the same class unless you
elect to receive them in cash. Contact your Financial Advisor at PaineWebber
or one of its correspondent firms if you prefer to receive dividends in cash.
Taxes
The dividends that you receive from a fund generally are subject to federal
income tax regardless of whether you receive them in additional fund shares or
in cash. If you hold fund shares through a tax-exempt account or plan, such as
an IRA or 401(k) plan, dividends on your shares generally will not be subject
to tax.
When you sell fund shares, you generally will be subject to federal income tax
on any gain you realize. If you exchange any fund's shares for shares of
another PaineWebber mutual fund, the transaction will be treated as a sale of
the first fund's shares, and any gain will be subject to federal income tax.
Financial Services Growth Fund expects that its dividends will be comprised
primarily of capital gain distributions. Utility Income Fund expects that its
dividends will primarily be taxed as ordinary income. The distribution of
capital gains will be taxed at a lower rate than ordinary income if the fund
held the assets that generated the gains for more than 12 months. Your fund
will tell you how you should treat its dividends for tax purposes.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 18
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
Financial Highlights
- -------------------------------------------------------------------------------
The following financial highlights tables are intended to help you understand
the funds' financial performance for the past 5 years. Shorter periods are
shown for classes of fund shares that have existed for less than 5 years.
Certain information reflects financial results for a single fund share. In the
tables, "total investment return" represents the rate that an investor would
have earned (or lost) on an investment in a fund, assuming reinvestment of all
dividends,
the information in the financial highlights has been audited by Ernst & Young
LLP, independent auditors, whose reports, along with the funds' financial
statements, are included in the funds' Annual Report to Shareholders. The
Annual Report may be obtained without charge by calling 1-800-647-1568.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 19
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Financial Services Growth Fund
----------------------------------------------------------------------------------------------
Class A Class B
---------------------------------------------- ----------------------------------------------
For the Years Ended March 31, For the Years Ended March 31,
---------------------------------------------- ----------------------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
-------- -------- ------- ------- ------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 33.56 $ 23.41 $ 21.16 $ 17.11 $ 16.92 $ 32.62 $ 22.87 $ 20.75 $ 16.85 $ 16.71
-------- -------- ------- ------- ------- -------- -------- ------- ------- -------
Net investment income... 0.33@ 0.20 0.18 0.30 0.25 0.09@ 0.09 0.04 0.13 0.11
Net realized and
unrealized gains
(losses) from
investments............ (2.96)@ 11.75 5.69 6.25 1.34 (2.87)@ 11.34 5.53 6.16 1.33
-------- -------- ------- ------- ------- -------- -------- ------- ------- -------
Net increase (decrease)
from investment
operations............. (2.63) 11.95 5.87 6.55 1.59 (2.78) 11.43 5.57 6.29 1.44
-------- -------- ------- ------- ------- -------- -------- ------- ------- -------
Dividends from net
investment income...... (0.28) (0.21) (0.23) (0.29) (0.13) (0.08) (0.09) (0.06) (0.18) (0.03)
Distributions from net
realized gains from
investment
transactions........... (0.41) (1.59) (3.39) (2.21) (1.27) (0.41) (1.59) (3.39) (2.21) (1.27)
-------- -------- ------- ------- ------- -------- -------- ------- ------- -------
Total dividends and
distributions.......... (0.69) (1.80) (3.62) (2.50) (1.40) (0.49) (1.68) (3.45) (2.39) (1.30)
-------- -------- ------- ------- ------- -------- -------- ------- ------- -------
Net asset value, end of
period................. $ 30.24 $ 33.56 $ 23.41 $ 21.16 $ 17.11 $ 29.35 $ 32.62 $ 22.87 $ 20.75 $ 16.85
======== ======== ======= ======= ======= ======== ======== ======= ======= =======
Total investment
return(1).............. (7.81)% 51.92% 28.72% 39.02% 10.22% (8.51)% 50.80% 27.74% 37.97% 9.37%
======== ======== ======= ======= ======= ======== ======== ======= ======= =======
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $204,433 $209,818 $85,661 $64,003 $49,295 $195,392 $198,473 $41,579 $28,147 $16,368
Expenses to average net
assets................. 1.17% 1.17% 1.52% 1.37% 1.45% 1.94% 1.92% 2.27% 2.12% 2.22%
Net investment income to
average net assets..... 1.07% 1.12% 0.90% 1.50% 1.40% 0.29% 0.37% 0.15% 0.74% 0.67%
Portfolio turnover
rate................... 59% 23% 40% 53% 14% 59% 23% 40% 53% 14%
</TABLE>
- -------
* Annualized
+ Commencement of issuance of shares
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges; results for each class would be lower if sales
charges were included. Total investment returns for periods of less than
one year have not been annualized.
@ Calculated using the average monthly shares outstanding for the year.
-----------
- --------------------------------------------------------------------------------
Prospectus Page 20
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund
Financial Highlights
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Financial Services Growth Fund
- ---------------------------------------------------------------------------------
Class C Class Y
- ------------------------------------------------- -----------------------------
For the For the Period
For the Years Ended March 31, Year Ended March 30, 1998+
- ------------------------------------------------- March 31, to March 31,
1999 1998 1997 1996 1995 1999 1998
- ------- ------- ------- ------ ------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 32.56 $ 22.84 $ 20.75 $16.86 $16.71 $33.56 $32.22
- ------- ------- ------- ------ ------ ------ ------
0.08@ 0.12 0.06 0.12 0.11 0.34@ 0.00
(2.86)@ 11.28 5.51 6.16 1.33 (2.89)@ 0.34
- ------- ------- ------- ------ ------ ------ ------
(2.78) 11.40 5.57 6.28 1.44 (2.55) 0.34
- ------- ------- ------- ------ ------ ------ ------
(0.09) (0.09) (0.09) (0.18) (0.02) (0.37) 0.00
(0.41) (1.59) (3.39) (2.21) (1.27) (0.41) 0.00
- ------- ------- ------- ------ ------ ------ ------
(0.50) (1.68) (3.48) (2.39) (1.29) (0.78) 0.00
- ------- ------- ------- ------ ------ ------ ------
$ 29.28 $ 32.56 $ 22.84 $20.75 $16.86 $30.23 $33.56
======= ======= ======= ====== ====== ====== ======
(8.50)% 50.76% 27.74% 37.92% 9.34% (7.57) 1.02%
======= ======= ======= ====== ====== ====== ======
$78,670 $63,809 $12,357 $6,989 $4,160 $5,292 $ 2
1.94% 1.92% 2.28% 2.14% 2.23% 0.90% 0.80%*
0.27% 0.36% 0.15% 0.72% 0.61% 1.22% 0.00%*
59% 23% 40% 53% 14% 59% 23%
</TABLE>
-----------
- --------------------------------------------------------------------------------
Prospectus Page 21
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Utility Income Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Utility Income Fund
-----------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------- ---------------------------------------
For the For the
For the Years Ended Four Years Ended For the Years Ended For the Four
March 31, Months Ended Nov. 30, March 31, Months Ended
---------------------- March 31, ---------------- ------------------------- March 31,
1999 1998 1995 1996 1995 1994 1999 1998 1997 1996
------ ------ ------ ------------ ------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period......... $13.79 $10.20 $ 9.76 $ 9.77 $ 8.31 $ 9.66 $ 13.79 $ 10.20 $ 9.75 $ 9.77
------ ------ ------ ------ ------- ------- ------- ------- ------- -------
Net investment
income......... 0.39 0.33 0.34 0.15 0.47 0.48 0.29 0.25 0.26 0.12
Net realized and
unrealized
gains (losses)
from
investments.... (0.22) 3.61 0.41 -- 1.44 (1.31) (0.23) 3.60 0.42 (0.01)
------ ------ ------ ------ ------- ------- ------- ------- ------- -------
Net increase
(decrease) from
investment
operations..... 0.17 3.94 0.75 0.15 1.91 (0.83) 0.06 3.85 0.68 0.11
------ ------ ------ ------ ------- ------- ------- ------- ------- -------
Dividends from
net investment
income......... (0.36) (0.35) (0.31) (0.16) (0.45) (0.52) (0.25) (0.26) (0.23) (0.13)
------ ------ ------ ------ ------- ------- ------- ------- ------- -------
Net asset value,
end of period.. $13.60 $13.79 $10.20 $ 9.76 $ 9.77 $ 8.31 $ 13.60 $ 13.79 $ 10.20 $ 9.75
====== ====== ====== ====== ======= ======= ======= ======= ======= =======
Total investment
return(1)...... 1.24% 39.15% 7.83% 1.46% 23.64% (8.76)% 0.49% 38.13% 7.05% 1.10%
====== ====== ====== ====== ======= ======= ======= ======= ======= =======
Ratios/Supplemental
Data:
Net assets, end
of period
(000's)........ $7,308 $7,856 $6,039 $9,416 $10,750 $12,532 $19,484 $21,562 $21,071 $34,765
Expenses to
average net
assets, net of
waivers from
adviser........ 1.59% 1.92% 1.93% 1.09%* 1.49% 1.58% 2.35% 2.68% 2.69% 1.85%*
Expenses to
average net
assets, before
waivers from
adviser, to
average net
assets......... 1.59% 1.92% 2.00% 1.44%* 1.49% 1.58% 2.35% 2.68% 2.76% 2.20%*
Net investment
income, before
waivers from
adviser, to
average net
assets......... 2.90% 2.77% 3.27% 4.26%* 5.13% 5.49% 2.16% 2.05% 2.51% 3.51%*
Net investment
income, before
waivers from
adviser, to
average net
assets......... 2.90% 2.77% 3.20% 3.91%* 5.13% 5.49% 2.16% 2.05% 2.44% 3.16%*
Portfolio
turnover rate.. 21% 10% 41% 21% 30% 92% 21% 10% 41% 21%
<CAPTION>
For the
Years Ended
Nov. 30,
------------------
1995 1994
-------- ---------
<S> <C> <C>
Net asset value,
beginning of
period......... $ 8.31 $ 9.65
-------- ---------
Net investment
income......... 0.40 0.42
Net realized and
unrealized
gains (losses)
from
investments.... 1.45 (1.31)
-------- ---------
Net increase
(decrease) from
investment
operations..... 1.85 (0.89)
-------- ---------
Dividends from
net investment
income......... (0.39) (0.45)
-------- ---------
Net asset value,
end of period.. $ 9.77 $ 8.31
======== =========
Total investment
return(1)...... 22.73% (9.35)%
======== =========
Ratios/Supplemental
Data:
Net assets, end
of period
(000's)........ $37,554 $37,156
Expenses to
average net
assets, net of
waivers from
adviser........ 2.23% 2.33%
Expenses to
average net
assets, before
waivers from
adviser, to
average net
assets......... 2.23% 2.33%
Net investment
income, before
waivers from
adviser, to
average net
assets......... 4.37% 4.72%
Net investment
income, before
waivers from
adviser, to
average net
assets......... 4.37% 4.72%
Portfolio
turnover rate.. 30% 92%
</TABLE>
- -------
* Annualized
+ Commencement of issuance of shares
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges; results for each class would be lower if sales
charges were included. Total investment returns for periods of less than
one year have not been annualized.
-----------
- --------------------------------------------------------------------------------
Prospectus Page 22
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Utility Income Fund
Financial Highlights
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Utility Income Fund
- -----------------------------------------------------------------------
Class C Class Y
- ------------------------------------------------------ --------------
For the For the Period
For the Years Ended For the Four Years Ended September 10,
March 31, Months Ended November 30, 1998+
- ---------------------- March 31, ---------------- to March 31,
1999 1998 1997 1996 1995 1994 1999
- ------ ------ ------ ------------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
$13.78 $10.20 $ 9.75 $ 9.77 $ 8.31 $ 9.65 $12.55
- ------ ------ ------ ------- ------- ------- ------
0.28 0.23 0.25 0.12 0.40 0.42 0.24
(0.22) 3.61 0.43 (0.01) 1.45 (1.31) 1.03
- ------ ------ ------ ------- ------- ------- ------
0.06 3.84 0.68 0.11 1.85 (0.89) 1.27
- ------ ------ ------ ------- ------- ------- ------
(0.26) (0.26) (0.23) (0.13) (0.39) (0.45) (0.27)
- ------ ------ ------ ------- ------- ------- ------
$13.58 $13.78 $10.20 $ 9.75 $ 9.77 $ 8.31 $13.55
====== ====== ====== ======= ======= ======= ======
0.44% 38.09% 7.06% 1.10% 22.71% (9.36)% 10.14%
====== ====== ====== ======= ======= ======= ======
$7,700 $7,736 $6,909 $11,072 $12,222 $13,922 $ 40
2.35% 2.68% 2.70% 1.85%* 2.24% 2.32% 1.25%*
2.35% 2.68% 2.76% 2.20%* 2.24% 2.32% 1.25%*
2.13% 1.99% 2.51% 3.50%* 4.37% 4.69% 2.57%*
2.13% 1.99% 2.44% 3.15%* 4.37% 4.69% 2.57%*
21% 10% 41% 21% 30% 92% 21%
</TABLE>
-----------
- --------------------------------------------------------------------------------
Prospectus Page 23
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Financial Services Growth Fund PaineWebber Utility Income Fund
<TABLE>
<S> <C> <C> <C> <C>
Ticker Symbol: Financial Services Growth Fund Class: A:PREAX.Q Utility Income Fund Class: A:PUTAX.Q
B:PREBX.Q B:PUIBX.Q
C:PFICX.Q C:PUTDX.Q
Y:None Y:None
</TABLE>
If you want more information about the funds, the following documents are
available free upon request:
Annual/Semi-Annual Reports
Additional information about the funds' investments is available in the funds'
annual and semi-annual reports to shareholders. In the funds' annual reports,
you will find a discussion of the market conditions and investment strategies
that significantly affected the funds' performance during the last fiscal
year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the funds and is incorporated
by reference into this prospectus.
You may discuss your questions about the funds by contacting your PaineWebber
Financial Advisor. You may obtain free copies of annual and semi-annual
reports and the SAI by contacting the funds directly at 1-800-647-1568.
You may review and copy information about the funds, including shareholder
reports and the SAI, at the Public Reference Room of the Securities and
Exchange Commission. You can get text-only copies of reports and other
information about the funds and about the operations of the SEC's Public
Reference Room:
. For a fee, by writing to or calling the SEC's Public Reference Room,
Washington, D.C. 20549-6009 Telephone: 1-800-SEC-0330
.Free, from the SEC's Internet website at: http://www.sec.gov
PaineWebber Financial Services Growth Fund Inc.
Investment Company Act File No. 811-4587
PaineWebber Managed Investments Trust
-PaineWebber Utility Income Fund
Investment Company Act File No. 811-4040
(C) 1999 PaineWebber Incorporated
-----------
- -------------------------------------------------------------------------------
